Understanding Supply and Demand Principles

Which of the following scenarios best illustrates the law of demand?

• As the price of coffee increases, the quantity demanded decreases.

• As the price of coffee increases, the quantity demanded increases.

• As the price of coffee decreases, the quantity supplied increases.

• As the price of coffee decreases, the quantity supplied decreases.

If the demand for a product increases while the supply remains constant, what is the likely effect on the equilibrium price?

• The equilibrium price will decrease.

• The equilibrium price will increase.

• The equilibrium price will remain unchanged.

• The equilibrium price will fluctuate randomly.

Which of the following graphs correctly represents a decrease in supply?

• A leftward shift of the supply curve.

• A rightward shift of the supply curve.

• A downward movement along the supply curve.

• An upward movement along the supply curve.

What happens to the quantity supplied of a good when there is a technological advancement in its production?

• The quantity supplied decreases.

• The quantity supplied increases.

• The quantity supplied remains the same.

• The quantity supplied becomes zero.

If the price of a substitute good increases, what is the likely effect on the demand for the original good?

• Demand for the original good will decrease.

• Demand for the original good will increase.

• Demand for the original good will remain unchanged.

• Demand for the original good will become zero.

Which of the following best describes the concept of equilibrium in a market?

• The point where supply exceeds demand.

• The point where demand exceeds supply.

• The point where supply equals demand.

• The point where supply and demand are unrelated.

What is the effect on the equilibrium quantity when both supply and demand increase simultaneously?

• The equilibrium quantity will decrease.

• The equilibrium quantity will increase.

• The equilibrium quantity will remain unchanged.

• The equilibrium quantity will become zero.

If a government imposes a price ceiling below the equilibrium price, what is the likely outcome in the market?

• A surplus of the good.

• A shortage of the good.

• No change in the market.

• An increase in the equilibrium price.

Which of the following factors would cause a rightward shift in the demand curve for a normal good?

• A decrease in consumer income.

• An increase in consumer income.

• A decrease in the price of a substitute good.

• An increase in the price of a complementary good.

What is the likely effect on the supply of a product if the cost of production decreases?

• The supply will decrease.

• The supply will increase.

• The supply will remain unchanged.

• The supply will become zero.